WHAT A LAST MINUTE MESS!
Just 15 weeks to the property tax – but it hasn’t been discussed at Cabinet and now Noonan admits detail ‘has to be worked out’
THE crisis over t he impending property tax deepened last night as it emerged that – with just 15 weeks to go before it has to be announced – no substantial decisions have been made.
Michael Noonan confirmed the detail ‘has to be worked out’ and astonishingly, the tax hasn’t been discussed at Cabinet level yet.
Although t he Finance Minister admitted that he has a preference for how the tax will be calculated, he refused to offer any details.
Ministers are still on their summer break from the Dáil and the next Cabinet meeting is not due until next week.
Even then, there will be just three months to arrange how the tax will work, and if necessary, how properties will be valued.
Homeowners are terrified the tax could cost as much as € 1,000 each. The Opposition lambasted the Government last night for unacceptable stalling, with Fianna Fáil accusing the Coalition of ‘ sleepwalking i nto another f i asco’
similar to that surrounding the household charge. According to a string of ministers who have spoken out in recent days – most recently Leo Varadkar on Sunday – the issue has not even been discussed among Cabinet members.
In Limerick yesterday, Mr Noonan refused to comment on speculation that the property tax will be valuebased but said that because of difficulties in collecting the €100 household charge, the Revenue Commissioners will be responsible for collecting the estimated tax-take of €500million from around 1.8million homes nationwide.
‘The detail of the property tax has to be worked out,’ Mr Noonan said.
‘All that has been decided is that there will be a property tax on family homes and that property tax will be collected by the Revenue Commissioners.
‘Of course I have a preference and I’ll be stating it at Cabinet.’
The Cabinet will be holding its first meeting after its summer break next Tuesday. Mr Noonan stressed that the Government will rely heavily on the report from the expert group chaired by Dr Don Thornhill, which Environment Minister Phil Hogan has received, but has yet to publish.
The vacuum of information on the new tax has led to speculation that the Government will opt for one of two methods of calculating it – based either on the value of a house, or of the land or site, and whether it is built on or not.
A tax based on market valuation would inevitably penalise those living in urban areas, while working it out it on sites would bring into the net t he wealthy o wners of undeveloped land banks lying idle all around the country.
Fianna Fáil’s social protection spokesman Barry Cowen said last night that the tax issue is shaping up to rival the household charge debacle. He also repeated his calls for the Government to immediately publish the Thornhill report on property tax that is sitting on the desk of Mr Hogan.
‘The Government appears to be sleepwalking into another fiasco along the lines of the household charge,’ Mr Cowen said.
‘The reports we have heard over the last number of days are causing confusion and distress for householders across the country. I would question who is leaking this information and what is the strategy?
‘The Government needs to take a step back from this and examine the impact of this extremely important decision.
‘Just one week after the scale of the mortgage arrears crisis in this country was revealed, the Government would need to be a lot more careful about the signals it is sending out to already hard-pressed homeowners.
‘There is no reason why Environment Minister Phil Hogan should still be sitting on the Thornhill report on property taxes.
‘ He must publish this report without delay and we should have a full national debate about what sort of additional charge would be fair in Ireland today and at what stage it should be introduced.’
Further opposition to the market valuation method emerged last night with the Age Action and St Vincent de Paul charities saying it would be unfair as it would not target the income of individuals, leaving some poorer elderly living in larger older houses with minimal incomes especially vulnerable.
Despite the expectation that the tax would be introduced in January, a tax expert with accountants PricewaterhouseCoopers yesterday predicted that as the process of introducing the tax is so complex, it will be at least another year before it can be collected.
‘A fully-functioning and effective property tax system from the first of January next year, I just don’t think t hat’s f easible,’ s ai d Feargal O’Rourke.
‘You’ve got a large number of logistical issues, you’ve got policy issues, the Revenue Commissioners haven’t got guidance yet as to what way the tax is going to be.
‘I think you’ll find that when the property tax is introduced, let’s say it’s introduced in the summer, you’ll probably find a very early payment date, so notwithstanding the fact that it will be coming in halfway through the year, I think people will find that they will be paying their property tax in full some time in the third or fourth quarter of 2013.’
Mr Noonan insisted that the Government will have the tax in place for next year.
‘The Government decided two things, first of all that there would be a property tax – we’re required to have one anyway under the terms of the agreement with the Troika – so we intend bringing it in next year,’ he said.
‘And because of the difficulties in collecting a flat rate of tax, the Government has decided that the new property tax will be collected by the Revenue Commissioners. None of the detail has been decided yet and what the base will be or anything like that, but it will be decided in due course between now and Budget day, obviously it’s a Budget matter.’
Labour Party chairman Colm Keaveney expressed his clear preference yesterday for a market valuation tax to be introduced.
‘I think it would the fairest way in that I think i t would be both equitable and the systems around market valuation would catch greater detail in terms of the data that would be required to have a fair and equitable taxation on a house,’ Mr Keaveney said. ‘The systems would have to reflect the current valuations, but there would also have to be a greater degree of a catalogue of information beyond the market catches of course; location, access to services, amenities, access to hospitals and so on.
‘ So i t will be a very complex c hal l e nge f or t he Thornhill committee to report to Government with respect to the detail on the property tax. ‘The system would have to be fluid, it would have to adjust over the course of time vis-à-vis the market valuation of the property.
‘However, my own personal view is that the market value approach is a more catch-all approach, in that it takes in a range of variables outside just the traditional site valuation and that it captures a greater degree of detail and data that would put a valuation on the property in the context of a taxation, in anticipation of the Thornhill report I would expect that the system would adjust itself to market valuation.’
Gerry Scully of Age Action said that he is opposed to this method because the organisation believes it would discriminate against many people who may own valuable property assets, but have little or no real income.
‘We think it should be based on ability to pay, it would be very unfair to base this on house value because of the problems it would cause for lower income families,’ he said.
A spokesman for St Vincent de Paul said it is opposed to market or site valuation and added that a system must be designed that is ‘fair and equitable to all’.
Transport Minister Leo Varadkar said the Government would not be backtracking on a property tax in the next Budget, even though the most complicated of issues have not even come up for discussion yet.
‘The decision that has been made by the Government is that a property tax will be brought in that year and that it’s going to be collected by the Revenue Commissioners,’ Mr Varadkar said on Sunday.
‘But it is something we have to do. We have to balance the books and we have to do it quite soon.’